United
States
 Securities
and Exchange Commission
 Washington,
DC 20549
 
 FORM
10-Q
 
 QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 
 For the
quarterly period ended March 31,
2009
 
 Commission
File Number 000-28789
 
 Falcon Ridge Development
Inc.
 (Exact
name of registrant as specified in its charter)
 
 
 Nevada
                        
                        84-1461919(State
      or other jurisdiction of incorporation)
                        
                        (IRS
      Employer File Number)5111
      Juan Tabo Boulevard N.E. Albuquerque, New Mexico
                        
                        87111(Address
      of principal executive offices)
                        
                        (zip
      code)
  (702) 386-5379
 (Registrant's
telephone number, including area code)
 
 Indicate
by check mark whether the registrant: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports); and
(2) has been subject to such filing requirements for the past 90
days.    Yes [X]  No [ ]
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T(Section 232.405 of
this chapter) during the preceding 12 months(or such shorter period that the
registrant was required to submit and post such files. Yes [x]  No [
]
  Indicate
by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer,” and “small reporting company” in Rule
12b-2 of the Exchange Act.
  Large
      accelerated filer
      []
                Accelerated
      filer []Non-accelerated
      filer [] (Do not check if a smaller reporting
      company)
                Smaller
      reporting
company  [X]
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act)  Yes []    No
[X]
  The
number of shares outstanding of the registrant's common stock, as of the latest
practicable date, July 2, 2009 was 78,054,805.
  
   Table
of Contents
 
  
 PagePart
      I – Financial InformationItem
      1.  Condensed Consolidated Financial Statements
                  3Condensed
      Consolidated Balance Sheet as of December 31, 2008 (unaudited) and
      September 30, 2008
                  3Condensed
      Consolidated Statements of Operations (unaudited) for the three months
      ended December 31, 2008 and 2007
                  4Condensed
      Consolidated Statement of Changes in Stockholders’ Deficit (unaudited) for
      the
                  5Condensed
      Consolidated  Statement of Cash Flow (unaudited) for
      the three months ended December 31, 2008.
                  6Item
      2.  Management’s Discussion and analysis of Financial Condition
      and Results of Operations
                  19Item
      3.  Qualitative and Qualitative Disclosures about Market
      Risk
                  23Item
      4.  Controls and Procedures
                  23Item
      1.  Legal Proceedings
                  25Item
      1a.  Risk Factors
                  25Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds
                  25Item
      3.  Defaults Upon Senior Securities
                  25Item
      4.  Submission of Matters to a Vote of Security
      Holders
                  25Item
      5.  Other Information
                  25Item
      6.  Exhibits
                  26Signaturres
                  27
 
 -
2 -
  
 Part I –
FINANCIAL INFORMATION
  
  Item
1.  Condensed Consolidated Financial Statements
 
 Falcon
Ridge Development Inc., and Subsidiaries
 Condensed
Consolidated Balance Sheets
 Forthe Periods Ended
 March
      31,
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  September
      30,2009
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2008Assets
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (unaudited)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (audited)Current
      Assets:Cash
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  1,119Real
      estate held for development and sale
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,191,570Total  current
      assets
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,192,689Long
      Term Assets:Real
      estate held for development and sale
                                                                                                                                  
                                                                                                                                  1,201,995
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -Equipment,
      net of accumulated depreciation
                                                                                                                                  
                                                                                                                                  38,428
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  45,211Total
      assets
                                                                                                                                  $
                                                                                                                                  1,240,423
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  3,237,900Liabilities
      and Stockholders' DeficitLiabilitiesCurrent
      Liabilities:Accounts
      payable
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  693,379
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  657,428Notes
      payable related parties
                                                                                                                                  
                                                                                                                                  1,159,342
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  1,154,766Current
      portion of notes payable
                                                                                                                                  
                                                                                                                                  1,493,300
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  1,554,123Retainage
      payable
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  90,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  90,000Accrued
      interest
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  550,675
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  363,430Accrued
      expenses
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  27,316
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  23,209Convertible
      Preferred stock, Series B, $.001 par value, 400,000 sharesauthorized,
      160,000 shares outstanding; liquidation value $485,000
                                                                                                                                  
                                                                                                                                  485,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  485,000Total
      current liabilities
                                                                                                                                  
                                                                                                                                  4,499,012
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  4,327,956Long-term
      notes payable, net of current portion
                                                                                                                                  
                                                                                                                                  77,123
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  15,000Stockholders'
      DeficitConvertible
      Preferred Stock, $.001 par value; 1,000,000 shares
    authorized:Preferred
      Stock Series a $.001 par value, 400,000 shares authorized,
                                                                                                                                  
                                                                                                                                  400,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  400,000160,000
      shares issued and outstanding, aggregare liquidation preference of
      $400,000Common
      stock, $.001 par value, 900,000,000 shares authorized, 78,054,805 and
      47,315,917shares
      issued and outstanding respectively
                                                                                                                                  
                                                                                                                                  78,054
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  47,316Additional
      paid-in capital
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  5,985,147
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  5,886,152Unexpired
      warrants
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (67,572
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  (88,890
                                                                                                                                  )Accumulated
      deficit
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (9,731,341
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  (7,349,634
                                                                                                                                  )Total
      Stockholders' deficit
                                                                                                                                  
                                                                                                                                  (3,335,712
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  (1,105,056
                                                                                                                                  )Total
      Liabilities and Stockholders' Deficit
                                                                                                                                  $
                                                                                                                                  1,240,423
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  3,237,900
  The
accompanying notes are an intergral part of these consolidated financial
statements.
  -
3 -
  Falcon
      Ridge Development Inc., and SubsidiariesCondensed
      Consolidated Statements of Operations(unaudited)For
      the Three Months Ended
                                                
                                                
                                                For
      the Six months EndedMarch
      31,
                                                
                                                
                                                March
      31,2009
                                                
                                                
                                                2008
                                                
                                                
                                                2009
                                                
                                                
                                                2008Nert
      sales
                                                
                                                $
                                                0
                                                
                                                
                                                $
                                                35,143
                                                
                                                
                                                $
                                                0
                                                
                                                
                                                $
                                                82,453EXPENSESCost
      of Goods sold
                                                
                                                
                                                0
                                                
                                                
                                                
                                                6,317
                                                
                                                
                                                
                                                0
                                                
                                                
                                                
                                                18,950Payroll
      and related expenses
                                                
                                                
                                                0
                                                
                                                
                                                
                                                24,473
                                                
                                                
                                                
                                                63,023
                                                
                                                
                                                
                                                48,945Depreciation
                                                
                                                
                                                1,994
                                                
                                                
                                                
                                                2,323
                                                
                                                
                                                
                                                3,989
                                                
                                                
                                                
                                                4,645Consulting
      and stock-based compensation
                                                
                                                
                                                0
                                                
                                                
                                                
                                                2,917,700
                                                
                                                
                                                
                                                86,200
                                                
                                                
                                                
                                                3,303,146Selling,
      general and administrative expenses
                                                
                                                
                                                18,380
                                                
                                                
                                                
                                                90,267
                                                
                                                
                                                
                                                29,428
                                                
                                                
                                                
                                                225,670Total
      expenses
                                                
                                                
                                                20,374
                                                
                                                
                                                
                                                3,041,079
                                                
                                                
                                                
                                                182,640
                                                
                                                
                                                
                                                3,601,356OTHER
      INCOME (EXPENSE)Interest
      expense
                                                
                                                
                                                105,135
                                                
                                                
                                                
                                                38,909
                                                
                                                
                                                
                                                208,563
                                                
                                                
                                                
                                                77,817Loss
      on umpairment of asset
                                                
                                                
                                                0
                                                
                                                
                                                
                                                0
                                                
                                                
                                                
                                                1,989,576
                                                
                                                
                                                
                                                0Loss
      on sale of fixed asset
                                                
                                                
                                                0
                                                
                                                
                                                
                                                0
                                                
                                                
                                                
                                                928
                                                
                                                
                                                
                                                0Other
      income
                                                
                                                
                                                0
                                                
                                                
                                                
                                                0
                                                
                                                
                                                
                                                0
                                                
                                                
                                                
                                                0Total
      other income and (expense)
                                                
                                                
                                                105,135
                                                
                                                
                                                
                                                38,909
                                                
                                                
                                                
                                                2,199,067
                                                
                                                
                                                
                                                77,817Loss
      before provision for income taxes
                                                
                                                
                                                (125,509
                                                )
                                                
                                                
                                                (3,044,844
                                                )
                                                
                                                
                                                (2,381,707
                                                )
                                                
                                                
                                                (3,596,720
                                                )Income
      taxes
                                                
                                                
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                0Net
      Loss
                                                
                                                $
                                                (125,509
                                                )
                                                
                                                $
                                                (3,044,844
                                                )
                                                
                                                $
                                                (2,381,707
                                                )
                                                
                                                $
                                                (3,596,720
                                                )Basic
      loss per common share
                                                
                                                $
                                                (0.002
                                                )
                                                
                                                $
                                                (0.117
                                                )
                                                
                                                $
                                                (0.033
                                                )
                                                
                                                $
                                                (0.138
                                                )Basic
      weighted average number of shares outstanding
                                                
                                                
                                                78,054,805
                                                
                                                
                                                
                                                26,129,612
                                                
                                                
                                                
                                                72,931,657
                                                
                                                
                                                
                                                26,129,612
  The
accompanying notes are an intergral part of these consolidated financial
statements.
  -
4 -
  
 Falcon
      Ridge Development, Inc., and SubsidiariesCondensed
      Consolidated Statement of Stockholders' DeficitQuarter
      Ended March 31, 2009AdditionalPreferred Stock
                                                        
                                                        
                                                        Common
      Stock
                                                        
                                                        
                                                        paid-in
                                                        
                                                        
                                                        Unexpensed
                                                        
                                                        
                                                        AccumulatedShares
                                                        
                                                        
                                                        Par
      value
                                                        
                                                        
                                                        Shares
                                                        
                                                        
                                                        Par
      value
                                                        
                                                        
                                                        capital
                                                        
                                                        
                                                        warrants
                                                        
                                                        
                                                        deficit
                                                        
                                                        
                                                        TotalBalance
      December 31, 2005
                                                        
                                                        
                                                        160,000
                                                        
                                                        
                                                        $
                                                        400,000
                                                        
                                                        
                                                        
                                                        3,761,312
                                                        
                                                        
                                                        $
                                                        752,262
                                                        
                                                        
                                                        $
                                                        899,420
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        (1,068,850
                                                        )
                                                        
                                                        $
                                                        982,832Stock
      issuance for Cash
                                                        
                                                        
                                                        194,000
                                                        
                                                        
                                                        
                                                        485,000
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        485,000Reclassified
      to liabilities
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (485,000
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (485,000
                                                        )Loss
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (417,974
                                                        )
                                                        
                                                        
                                                        (417,974
                                                        )Balance
      September 30, 2006
                                                        
                                                        
                                                        354,000
                                                        
                                                        
                                                        $
                                                        400,000
                                                        
                                                        
                                                        
                                                        3,761,312
                                                        
                                                        
                                                        
                                                        752,262
                                                        
                                                        
                                                        
                                                        899,420
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (1,486,824
                                                        )
                                                        
                                                        
                                                        564,858Reclass
      common stock and APIC
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (79
                                                        )
                                                        
                                                        
                                                        (748,501
                                                        )
                                                        
                                                        
                                                        748,501
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Issuance
      of common stock
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        14,698,104
                                                        
                                                        
                                                        
                                                        14,698
                                                        
                                                        
                                                        
                                                        365,526
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        380,224Net
      loss 9-30-2007
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (1,290,190
                                                        )
                                                        
                                                        
                                                        (1,290,190
                                                        )Balance
      September 30, 2007
                                                        
                                                        
                                                        354,000
                                                        
                                                        
                                                        
                                                        400,000
                                                        
                                                        
                                                        
                                                        18,459,337
                                                        
                                                        
                                                        
                                                        18,459
                                                        
                                                        
                                                        
                                                        2,013,447
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (2,777,014
                                                        )
                                                        
                                                        
                                                        (345,108
                                                        )Stock
      issued for service
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        28,650,000
                                                        
                                                        
                                                        
                                                        28,650
                                                        
                                                        
                                                        
                                                        2,860,221
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        2,888,871Stock
      issued for debt
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        206,580
                                                        
                                                        
                                                        
                                                        207
                                                        
                                                        
                                                        
                                                        10,102
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        10,309Warrants
      issued with notes payable
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        115,090
                                                        
                                                        
                                                        
                                                        (88,890
                                                        )
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        26,200Warrants
      issued for service
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        887,292
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        887,292Net
      loss 09-30-08
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (4,572,620
                                                        )
                                                        
                                                        
                                                        (4,572,620
                                                        )Balance
      September 30, 2008
                                                        
                                                        
                                                        354,000
                                                        
                                                        
                                                        $
                                                        400,000
                                                        
                                                        
                                                        
                                                        47,315,917
                                                        
                                                        
                                                        $
                                                        47,316
                                                        
                                                        
                                                        $
                                                        5,886,152
                                                        
                                                        
                                                        $
                                                        (88,890
                                                        )
                                                        
                                                        $
                                                        (7,349,634
                                                        )
                                                        
                                                        $
                                                        (1,105,056
                                                        )Stock
      issued for services
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        24,922,222
                                                        
                                                        
                                                        
                                                        24,922
                                                        
                                                        
                                                        
                                                        58,278
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        83,200Stock
      issued for payroll
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        5,816,666
                                                        
                                                        
                                                        
                                                        5,816
                                                        
                                                        
                                                        
                                                        40,717
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        46,533Accreation
      of unexpired warrants
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        10,659
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        10,659Net
      loss for quarter ended 12-31-08
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (2,256,198
                                                        )
                                                        
                                                        
                                                        (2,256,198
                                                        )`Balance
      December 31, 2008
                                                        
                                                        
                                                        354,000
                                                        
                                                        
                                                        $
                                                        400,000
                                                        
                                                        
                                                        
                                                        78,054,805
                                                        
                                                        
                                                        $
                                                        78,054
                                                        
                                                        
                                                        $
                                                        5,985,147
                                                        
                                                        
                                                        $
                                                        (78,231
                                                        )
                                                        
                                                        $
                                                        (9,605,832
                                                        )
                                                        
                                                        $
                                                        (3,220,863
                                                        )Accreation
      of unexpired warrants
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        10,659
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        10,659Net
      loss for the quarter ended 03-31-09
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (125,509
                                                        )
                                                        
                                                        
                                                        (125,509
                                                        )Balance
      March 31, 2009
                                                        
                                                        $
                                                        354,000
                                                        
                                                        
                                                        $
                                                        400,000
                                                        
                                                        
                                                        $
                                                        78,054,805
                                                        
                                                        
                                                        $
                                                        78,054
                                                        
                                                        
                                                        $
                                                        5,985,147
                                                        
                                                        
                                                        $
                                                        (67,572
                                                        )
                                                        
                                                        $
                                                        (9,731,341
                                                        )
                                                        
                                                        $
                                                        (3,335,713
                                                        )
  The
accompanying notes are an intergral part of these consolidated financial
statements.
  -
5 -
  Falcon
Ridge Development Inc., and Subsidiaries Condensed
Condolidated Statements of Cash Flows
 (Unaudited)
 For
      the Six Months EndedMarch
      31,2009
                                                    
                                                    
                                                    2008OPERATING
      ACTIVITIESNet
      loss
                                                    
                                                    $
                                                    (2,381,707
                                                    )
                                                    
                                                    $
                                                    (3,596,720
                                                    )Adjustments
      to reconcile net loss tonet
      cash used in operating activities:Stock
      issued for services and payroll
                                                    
                                                    
                                                    129,733
                                                    
                                                    
                                                    
                                                    2,869,522Depreciation
                                                    
                                                    
                                                    3,989
                                                    
                                                    
                                                    
                                                    4,645Warrants
      expensed
                                                    
                                                    
                                                    21,318
                                                    
                                                    
                                                    
                                                    443,646Impairment
      of Real estate held for development and sale
                                                    
                                                    
                                                    1,989,576Changes
      in operating assets and liabilities:Real
      estate held for development and sale
                                                    
                                                    
                                                    0
                                                    
                                                    
                                                    
                                                    (450
                                                    )Accounts
      payable
                                                    
                                                    
                                                    35,951
                                                    
                                                    
                                                    
                                                    76,751Accrued
      interest
                                                    
                                                    
                                                    187,245
                                                    
                                                    
                                                    
                                                    102,181Accrued
      liabilities
                                                    
                                                    
                                                    4,107
                                                    
                                                    
                                                    
                                                    10,315-Net
      cash used in operating activities
                                                    
                                                    
                                                    (9,788
                                                    )
                                                    
                                                    
                                                    (90,110
                                                    )INVESTING
      ACTIVITIESReclassification  of
      assets
                                                    
                                                    
                                                    1,993Purchase
      of capital assets
                                                    
                                                    
                                                    0
                                                    
                                                    
                                                    
                                                    (2,833
                                                    )Proceeds
      from sale of fixed asset
                                                    
                                                    
                                                    800
                                                    
                                                    
                                                    
                                                    0Net
      cash provided by (used in) investing activities
                                                    
                                                    
                                                    2,793
                                                    
                                                    
                                                    
                                                    (2,833
                                                    )FINANCING
      ACTIVITIES*Notes
      converted to common stock
                                                    
                                                    
                                                    0
                                                    
                                                    
                                                    
                                                    (10,000
                                                    )Repayment
      of notes payable
                                                    
                                                    
                                                    0
                                                    
                                                    
                                                    
                                                    0Related
      party notes payable
                                                    
                                                    
                                                    4,576
                                                    
                                                    
                                                    
                                                    20,692Notes
      payable issued
                                                    
                                                    
                                                    1,300
                                                    
                                                    
                                                    
                                                    10,000Proceeds
      from shares to be issued
                                                    
                                                    
                                                    0
                                                    
                                                    
                                                    
                                                    2,000Net
      cash providec by financing activities
                                                    
                                                    
                                                    5,876
                                                    
                                                    
                                                    
                                                    22,692NET
      DECREASE IN CASH AND CASH EQUIVALENTS
                                                    
                                                    
                                                    (1,119
                                                    )
                                                    
                                                    
                                                    (70,251
                                                    )CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                                                    
                                                    
                                                    1,119
                                                    
                                                    
                                                    
                                                    74,521CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                                                    
                                                    $
                                                    0
                                                    
                                                    
                                                    $
                                                    4,270SUPPLEMENTAL
      DISCLOSURE OF INFORMATIONCASH
      PAID FOR:Income
      taxes
                                                    
                                                    $
                                                    0
                                                    
                                                    
                                                    $
                                                    0Interest
                                                    
                                                    $
                                                    0
                                                    
                                                    
                                                    $
                                                    17,850SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING ANDFINANCING
      ACTIVITIES:Warrants
      issued
                                                    
                                                    $
                                                    0
                                                    
                                                    
                                                    $
                                                    157,500Stock
      issued for services and payroll
                                                    
                                                    $
                                                    129,733
                                                    
                                                    
                                                    $
                                                    2,869,521
  The
accompanying notes are an intergral part of these consolidated financial
statements.
  -
6 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  (1)
Summary of Significant Accounting Policies
  Organization,
Shell Merger and Principles of Consolidation
  Organization
  Falcon
Ridge Development, Inc. ("FRDI" or the "Company") is engaged in the real estate
industry and acquires tracts of raw land and develops them into
communities, including, lots for sale to homebuilders and homes for sale to
the public. These operations are predominantly located in the City of Rio
Rancho, New Mexico and Belen, New Mexico. Since inception, the Falcon Ridge
Development, Inc. has developed one property known as Sierra Norte.
  Going
Concern
  The
Company experienced significant operating losses during fiscal years ended
September 30, 2008 and 2007, of $4,572,620 and $1,290,190
respectively.  For the six months r ended March 31, 2009, the Company
lost and additional $2,381,707 and had an accumulated deficit of $9,731,341 at
that date.  In addition, the Company has a stockholders’ deficit of
$3,335,712 as of March 31, 2009.     The Company
incurred a negative cash flow from operating activities of $289,435 for the year
ended September 30, 2008, and a negative cash flow from operating activities of
$9,788 for the six months ended March 31, 2009.  Implementation of its
business plan is dependent upon its ability to raise additional
capital.  The Company is in default on its mortgage to Metro Loan Corp
in principal amount of $1,150,000 secured by the Spanish Trails
development.   In the event the lender initiates foreclosure
proceedings and the Company is unable to resolve the situation in its favor, the
Company’s major revenue producing asset will be lost.  Management will
then have to locate and finance a profitable replacement business
activity.  The Company is in default on its note to Freedom Financial
in its principal amount of  $200,000.00.  These matters
raise substantial doubt about the Company’s ability to continue as a going
concern. Management is searching for additional business opportunities to
generate revenue sufficient to enable to Company to achieve profitable
operations.  There is no guarantee that management will be successful
in its endeavors.  The accompanying financial statements do not
include any adjustments relating to the recoverability and classification of the
recorded asset amounts or the amounts and classification of liabilities that
might be necessary should the Company be unable to continue in
existence.
   -
7 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
 
  Shell
Merger
  Falcon
Ridge Development, Inc. (the "Company" or “we” or “us”) is a Nevada corporation.
Our principal business address is 5111 Juan Tabo Boulevard N.E., Albuquerque,
New Mexico 87111. We changed the domicile of the company from Colorado to Nevada
on or about July 6, 2005 and changed our name from PocketSpec Technologies,
Inc., to Falcon Ridge Development, Inc. We have various subsidiaries, Sierra
Norte, LLC ("Sierra Norte"), Spanish Trails, LLC ("Spanish Trails"), Falcon
Ridge Financial LLC., Falcon Ridge Realty LLC. And  Falcon Ridge
Investments LLC. We operate in the real estate industry and services to the real
estate industry. We acquire tracts of raw land and develop them into
communities. Often these communities include residential, commercial, industrial
and retail components to them.  We plan to offer our own housing
product in these and other communities developed by other developers. In
addition, in 2006 we completed the formation of various wholly owned
subsidiaries including Falcon Ridge Financial LLC, Falcon Ridge Realty LLC and
Falcon Ridge Investments LLC. Falcon Ridge Financial places and brokers real
estate mortgages of all types but primarily concentrates on residential
mortgages. Falcon Ridge Realty is our resale division and concentrates on
selling homes for the general public under listing and sale agreements with
individual clients. Falcon Ridge Investments, LLC is a vehicle for creating and
operating private placement offerings as well as other type of investment
vehicles.
  On May 20, 2005, we completed a reverse
acquisition transaction. We acquired Sierra Norte, a New Mexico limited
liability company, which thereby became our wholly-owned subsidiary. Sierra
Norte is a land development company in the Albuquerque, New Mexico area.
Formerly, we were a technology company in the business of developing and
marketing color comparison devices. We acquired Spanish Trails on July 6, 2005
as discussed below. Originally, we were incorporated as Monument Galleries,
Inc., a Colorado corporation, on May 15, 1998.
  As a result of the Sierra Norte
acquisition, the former security holders of Sierra Norte acquired a majority of
our outstanding shares of common stock. For accounting purposes, Sierra Norte
has been deemed to be the acquirer in the acquisition and, consequently, the
assets, liabilities and historical operations that are reflected in our
financial statements are those of Sierra Norte, which are recorded at the
historical cost basis of Sierra Norte. The reverse acquisition was consummated
under Colorado law pursuant to an Agreement and Plan of Reorganization
dated May 20, 2005.
  Basis of
Presentation
  In the
opinion of management, the accompanying balance sheets and related interim
statements of income, cash flows, and stockholders' equity include all
adjustments, consisting only of normal recurring items, necessary for their fair
presentation in conformity with accounting principles generally accepted in the
United States of America ("U.S. GAAP"). Preparing financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenue, and expenses. Actual results and outcomes may
differ from management's estimates and assumptions.
   -
8 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  Interim
results are not necessarily indicative of results for a full year. The
information included in this Form lO-Q should be read in conjunction with
information included in the Form IO-K.
  
 Principles of
Consolidation
  The
consolidated financial statements include the accounts of Falcon Ridge
Development, Inc. and its wholly owned subsidiaries SNLLC and Spanish Trails LLC
(STLLC) (together, the "Company"). Intercompany transactions and balances have
been eliminated in the consolidation.
  Use of
Estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
  Reclassifications
  Certain
prior-period amounts have been reclassified for comparative purposes to conform
to the current period presentation.
  STLLC
decided, in the fourth quarter of 2005, that the $471,908 Falcon Ridge
Development, LLC ("FRLLC") recorded as a contribution to capital during the
third quarter of 2005 in the acquisition of the Cordova Property should be
repaid to FRLLC. Therefore, the Company reclassified the $471,908 from
additional paid in capital to indebtedness to related parties in the
accompanying consolidated financial statements.
  Revenue Recognition on Sales
of Real Estate
  The
profit on sales of real estate is accounted for in accordance with the
provisions of SFAS No. 66, "Accounting for Sales of Real Estate." The Company
recognizes revenue from the sale of real estate at the time the sale is closed
and the title is transferred from the Company to the buyer.
  Cash and Cash
Equivalents
  The
Company considers all highly liquid securities with original maturities of three
months or less when acquired to be cash equivalents. The Company had no cash
equivalents at Marc h 31, 2009
  Real Estate Held forDevelopment andSale
  The
carrying value of land and development includes the initial acquisition costs of
land, improvements thereto, and other costs incidental to the acquisition or
development of land. These costs are allocated to properties on a relative sales
value basis and are charged to costs of sales as specific properties are sold.
Due to the nature of the business, land and development costs have been
classified as an operating activity on the consolidated statement of cash
flows.
   -
9 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  Impact
credits received from the negotiated settlement with the City of Rio Rancho are
offset against land development costs.
  The
company reviews the fair value less costs to sell of land under development at
the end of each reporting cycle and where the carrying value of the asset is not
recoverable and exceeds its fair value an impairment loss will be
recognized.
  Interest
  The
Company capitalizes interest costs to real estate held for resale during
development and construction. Capitalized interest is charged to cost of sales
as the related lots are delivered to the buyer.
  Fixed Assets and
Depreciation
  Fixed
assets are recorded at cost. Expenditures that extend the useful lives of assets
are capitalized. Repairs, maintenance and renewals that do not extend the useful
lives of the assets are expensed as incurred. Depreciation is provided on the
straight-line method generally over the following estimated useful lives:
software, 5 years; equipment, 5 years.
  Earnings (loss) per Common
Share
  Basic net
income per share is computed by dividing the net income available to common
shareholders (the numerator) for the period by the weighted average number of
common shares outstanding (the denominator) during the period. The computation
of diluted earnings is similar to basic earnings per share, except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if potentially dilutive common shares had been
issued.
  At  March
31, 2009 and 2008, there was no variance between basic and diluted loss per
share as the convertible preferred stock outstanding, if converted, would be
anti-dilutive.
  Impairment or Disposal of
Long-Lived Assets
  The
Company evaluates real estate projects and other long-lived assets on an
individual basis for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable in
accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" and SFAS 67 “Accounting for Costs and Initial Rental
Operations of Real Estate Projects.” An asset is considered impaired if its
carrying amount exceeds the future net cash flow the asset is expected to
generate or its net realizable value. If an asset is considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds its fair market value. We assess the recoverability
of our real estate projects, long-lived and intangible assets by determining
whether the unamortized balances can be recovered through undiscounted future
net cash flows of the related assets. The amount of impairment, if any, is
measured based on projected discounted future net cash flows. When impairment
exists the carrying value of the asset will be reduced by an allowance for the
amount of the impairment.  For the quarter ended December 31, 2008 the
company recognized an impairment loss in the carrying value of its Real estate
held for development and sale of $1,989,576.
   -
10 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  Stock-based Compensation
  The
Company adopted Statement of Financial Accounting Standards No. 123 (revised
2004), Share-Based Payment (SFAS 123R), effective January 1, 2007. SFAS 123R
requires the recognition of the fair value of stock-based compensation in net
income. The Company has elected the modified prospective transition method for
adopting SFAS 123R. Under this method, the provisions of SFAS 123R apply to all
awards granted or modified after the date of adoption. In addition, the
unrecognized expense of awards not yet vested at the date of adoption,
determined under the original provisions of SFAS 123, shall be recognized in net
income in the periods after the date of adoption. The Company had no unvested
awards at March 31, 2009, and no awards were granted during the year ended
September 30, 2008.
  Income
Taxes
  Income
taxes are accounted for using the asset and liability method. Under this method,
deferred income tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred income tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which these temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A valuation
allowance is provided for deferred tax assets that are not expected to be
recovered from future operations.
  Financial Instruments and
Concentration of Credit Risk
  The
carrying amounts of the Company's financial assets and liabilities, including
cash, accounts payable, and preferred shares with mandatory redemption at
September 30, 2007, approximate fair value because of the short maturity of
these instruments. The carrying amount of the Company's notes payable
approximates fair value at March 31, 2009, since the notes are at floating rates
or fixed rates that approximate current market rates for notes with similar
risks and maturities.
  Preferred Shares subject to
mandatory redemption
  The
features of our Series B Preferred Stock within SFAS 150 “Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity”. Due
to redemption features of the securities, the preferred shares are being
classified as a liability in these financial statements. The securities give the
holder the option of a net cash settlement or a settlement in common share based
on a conversion rate. The settlement amount under SFAS 150 at September 30, 2007
would have been 640,264 shares at a bid price of $ 1.01 per share or $
646,666.
  New Accounting
Standards
  SFAS No.
151, "Inventory Costs," is effective for fiscal years beginning after June 15,
2005. This statement amends the guidance in Accounting Research Bulletin ("ARB")
No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). The adoption of SFAS 151 did not have a material impact on the
Company's financial statements.
   -
11 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  
  SFAS No.
152, "Accounting for Real Estate Time-Sharing Transactions," is effective for
fiscal years beginning after June 15, 2005. This statement amends SFAS No. 66,
Accounting for Sales of Real Estate, to reference the financial accounting and
reporting guidance for real estate time-sharing transactions that is provided in
American Institute of Certified Public Accountants Statement of Position 04-2,
Accounting for Real Estate Time-Sharing Transactions. The adoption of SFAS No.
152 did not have a material impact on the Company's financial
statements.
  SFAS No.
123(R), "Share-Based Payment," replaces SFAS No. 123, "Accounting for
Stock-Based Compensation," and supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees." This statement requires that the compensation cost
relating to share-based payment transactions be recognized in the financial
statements. The Company is required to apply this statement in the first interim
period that begins after December 15, 2005. The adoption of SFAS No. 123(R) did
not have a material impact on the Company's financial.
  SFAS No.
153, "Exchanges of Non-monetary Assets" - an amendment of APB Opinion No. 29, is
effective for fiscal years beginning after June 15, 2005. This statement
addresses the measurement of exchange of non-monetary assets and eliminates the
exception from fair-value measurement for non-monetary exchanges of similar
productive assets in paragraph 21(b) of APB Opinion No. 29, "Accounting for
Non-monetary Transactions," and replaces it with an exception for exchanges that
do not have commercial substance. The adoption of SFAS No. 153 did not have a
material impact on the Company's financial statements.
  FIN No.
46(R) revised FIN No. 46, "Consolidation of Variable Interest Entities,"
requiring the consolidation by a business of variable interest entities in which
it is the primary beneficiary. The adoption of FIN No. 46 did not have an impact
on the Company's financial statements.
  The EITF
reached a consensus on Issue No. 04-8, "The Effect of Contingently Convertible
Debt on Diluted Earnings Per Share" ("EITF 04-8"), which addresses when the
dilutive effect of contingently convertible debt instruments should be included
in diluted earnings (loss) per share. EITF 04-8 is effective for reporting
periods ending after December 15, 2004. The adoption of EITF 04-8 did not
have an impact on diluted earnings (loss) per share.
  (2)
Related Party Transactions
  The
Company has been conducting its operations in a building rented by an affiliate.
During the quarters ended March 31, 2009 and 2008, the Company recorded
rent expense of $ 0 and $16,500, respectively.   The affiliate
has suspended the lease for an indefinite period of time.
  The
Company's affiliate pays certain expenses on its behalf. The Company reimburses
these expenses paid on its behalf by the affiliate at actual cost. Overhead
expenses and indirect labor incurred by the affiliate are allocated to the
Company based on management-approved estimates of time and effort. The Company
reviews the estimated rate from time-to-time.
  Indebtedness
to related parties consisted of the following at March 31, 2009:
   -
12 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  Note
payable  - to Karen Duran &/or Fred Montano, bearing interest at
Published Prime plus 3%, payable in monthly installments of $20,000.00 plus
interest commencing on October 1, 2007.  The note is secured by the
land and development costs of the Spanish Trails development.  To
March 31, 2009, no principle or interest payments have been made.
  Total
financing under the agreement is $1,136,074.
  Karen
Duran and Fred Montano have advanced the Company funds for working capital
purposes during the year.  As of March 31, 2009, the amounts so
advanced total $15,268.  The advances are not interest
bearing.
  On August
25, 2008, the Company borrowed $5,000 for working capital, from Troy Duran,
director of the Company and the brother of Karen Duran.  The note was
due February 5, 2009 and has an interest rate of 11%.
  On
December 10, 2008, the Company borrowed $3,000 from Sebastian Ramirez, a
director of the Company.  The note bears interest at rates ranging
from 15 to 25%.  The maturity date of the note is April 1, 2009. The
note was issued with 100,000 warrants to purchase the Company’s common stock at
a price of $.05 per share.  The warrants expire 30 months subsequent
to the date of the note.  The Company computed the value of the
warrants using the Black-Scholes model.  The discount rate was $1.620
and the computed volatility was 321.32%.  The term of the warrants is
2.5 years.  The computed value of the warrants was not material and no
expense was recorded.
  As of
March 31, 2009, total indebtedness to related parties was
$1,159,342.
  
  (3) Fixed
Assets
  Fixed
      assets consist of the following at March 31, 2009:
                    
                    Cost
                    
                    
                    Accumulated
      DepreciationComputer
      Software & Hardware
                    
                    $
                    24,496
                    
                    
                    $
                    4,356Equipment
                    
                    
                    6,319
                    
                    
                    
                    5,598Website
                    
                    
                    26,030
                    
                    
                    
                    8,463Totals
                    
                    $
                    56,845
                    
                    
                    $
                    18,417
  Depreciation
expense for the three months ended March 31, 2009 and 2008 was $1,994 and $3,989
respectively.
   -
13 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  (4) Real
Estate Operations
  The
Company completed development of Sierra Norte I and II subdivisions in Rio
Rancho, New Mexico in 2006. The Company is in the process of developing
approximately 139 acres of raw land in the Belen, New Mexico referred to as
"Spanish Trails." Spanish Trails consists of land platted into approximately 517
home sites. Home sites will be sold to different builders or developed by the
Company.
  Real
estate held for development and sale, consists of the following at March 31,
2009:
  Real
      estate held for development and sale
                      
                      $
                      1,201,995
 
  During
the quarter ended December 31, 2008, the Company became increasingly concerned
regarding the carrying value of the Spanish Trails development.  As of
September 30, 2008, consideration was given to reflecting impairment in the
carrying value of $3,191,570.  However , due to market conditions in
the New Mexico area and the targeted market price of our product in Spanish
Trails, the Company determined that no material impairment of the asset had
occurred in the period ending September 30, 2008.  In addition, steps
taken by the US Government appeared to be stabilizing the real estate
market.  However, in the quarter ending 12-30-08, the market continued
to deteriorate and the pace of deterioration increased Management had also seen
significant price reductions of real estate for sale in the surrounding area
during the quarter ended December 31, 2008.  The company determined
that the asset had in fact been impaired and an adjustment was made to reduce
that carrying value by $1,989,577 resulting in a net carrying value of
$1,200,000 as of December 31, 2009.  During the quarter ended March
31, 2009, the Company made a reclassification of $1,995 to the carrying value of
Spanish Trails.
  During
the quarter ended March 31, 2009, the Company continued to evaluate the carrying
value of Spanish Trails.  Most significant factors effecting the value
of this project indicate the decrease in real estate values in the area has
reached bottom and that no additional impairment of this assets is necessary as
of March 31, 2009.
  
  (5) Notes
Payable
  Note
payable consists of the following at March 31, 2009:
  Note
payable Freedom Financial Note amount $200,000.00, interest payable at 10% per
annum, conversation rights at renewal date with 2% renewal fee, Conversation
option at $0.75
  Note
payable Metro Loan Corp, with interest at 12 percent interest only payments in
monthly installments of $11,100.00 collateralized by a First Mortgage due August
1, 2008.  Terms of the Loan Agreement describe an Extension
Option.  Terms of the Extension Option are for two additional six (6)
month periods at the higher of (i) eighteen percent (18%) interest or (ii) Prime
Rate plus 1,000 basis points.  Option is NOT AUTOMATIC and is
at the discretion of the Lender.  Fred Montano is a Guarantor of this
mortgage.
  -
14 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  Total
financing under the agreement is $1,150,000.00.
  The
mortgage was due August 1, 2008. Its extension is at the discretion of the
mortgage holder who has not agreed to an extension at the time of this
filing.  The Company has stopped making payments and is in the process
of evaluating its options, including surrendering the deed in lieu of
foreclosure.  The Company is actively seeking a buyer
  During
the three month period ending June 30, 2008, the Company issued several notes
with warrants.  The notes bear interest compounded monthly at 10% for
the first sixty days, 12% for the next 12 months, and 18% interest
thereafter.  The  maturity dates and amounts are as
follows:
  Maturity
                              Date
                            
                            Principal
                              AmountsMay,
      2009
                            
                            $
                            70,000October,
      2009
                            
                            
                            60,000July,
      2010
                            
                            
                            10,000May,
      2011
                            
                            
                            67,123Total
                            
                            $
                            207,123
  In
September of 2008, the issued a note payable at an interest rate of 11% due
February 5, 2009.  The principal amount of the note is
$10,000.
  
  (6)
Warrants
  On
October 8, 2007, the Company issued 2,000,000 warrants with an estimated value
of $ 899,809 to Redwood Consulting LLC. The warrants have an exercise price of
$0.50 per share, the warrants become exercisable either twelve months after the
underlying common stock issuable in the exercise of these warrants is declared
registered and effective by the SEC in the Company’s current SEC registration
statement; or 5:30 P.M. Pacific Daylight Savings Time on October 8, 2015. The
warrants expire 5:30 PM Pacific Daylight Savings Time on October 8, 2015, or
twelve months after becoming exercisable. The Company has recorded consulting
fees relating to these options of $443,646.  As of the date of this
report, none of the warrants have vested.
  The fair
value of these options was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 169%; risk-free interest rate of 4.12%; and expected life of 8
years.
  During
the three month period ending June 30, 2008, the Company issued 1,344,000
warrants with an estimated value of $ 106,590 to several shareholders with notes
in the amount of $207,122. The warrants have an exercise price of $0.05 per
share, the warrants become exercisable at the effective date. The warrants
expire thirty months after becoming exercisable. The Company has recorded
interest expense relating to these options of $6,352 for the quarter ended
December 31, 2008.  As of the date of this report, all of the warrants
have vested.
   -
15 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  The fair
value of these options was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 135%; risk-free interest rate of 4.12%; and expected life of 2.3
years.
  A summary
of stock option and warrant activity for all plans follows:
  Outstanding
      Options
                    
                    Options
                      Outstanding
                    
                    
                    Warrants
      Outstanding
                    
                    
                    Exercise
                      PriceGranted
                    
                    
                    -
                    
                    
                    
                    5,244,000
                    
                    
                    $
                    0.05
      - 0.50Exercised
                    
                    
                    -
                    
                    
                    
                    -Canceled
                    
                    
                    -
                    
                    
                    
                    -Balance,
      March 31, 2009
                    
                    
                    -
                    
                    
                    
                    5,244,000
                    
                    
                    $
                    0.05
      - 0.50
 
  Following
is a summary of the status of fixed options and warrants
outstanding at March 31, 2009:
  Outstanding
      Optionsand
      Warrants
                          
                          
                          Exercisable
      Options
                            and
      WarrantsExercise
      Price Range
                          
                          
                          Number
                          
                          WeightedAverage
                            Remaining
      Contractual Life
                          
                          Weighted
      Average
                            Exercise
      Price
                          
                          
                          Number
                            Exercisable
                          
                          
                          Weighted
                            Average
                            Exercise
      Price$
                          0.50
                          
                          
                          
                          2,000,000
                          
                          7.4
      years
                          
                          $
                          0.50
                          
                          
                          
                          -
                          
                          
                          $
                          0.000.05
                          
                          
                          
                          3,244,000
                          
                          2.3
      years
                          
                          $
                          0.05
                          
                          
                          
                          -
                          
                          
                          $
                          0.05
 
   -
16 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  (7)
Income Taxes
  A
reconciliation of U.S. statutory federal income tax rate to the effective rate
follows for the three month period ending June 30, 2008:
  U.S.
      statutory federal rate
                  
                  
                  20.000
                  %State
      income tax rate
                  
                  
                  4.80
                  %Net
      operating loss for which no tax benefit is currently
    available
                  
                  
                  (24.800
                  )%0.00
                  %
 
  For the
three month period ending March 31, 2009 the Company estimated that it would
have a loss for income taxes purposes and therefore reported no
provision.
  
  (8)
Shareholders' Deficit
  Preferred
Stock
  On July
20, 2005, the Company established Series A Convertible Preferred Shares and
authorized 400,000 shares. The preferences are as follows:
  ·
              Shares
      are non-cumulative with a preference over common shares if and when a
      dividend is declared.
  ·
              Shares
      are convertible into common stock at any time on the basis of 100 common
      shares for 1 share of preferred stock. This conversion rate is subject to
      adjustments for forward or reverse splits or other capitalizations. The
      option was of no intrinsic benefit, at the commitment date, to the
      preferred shareholder.
  ·
              Shares
      have a priority over common shares and other convertible preferred
      shares upon liquidation.
  ·
              Shares
      are callable at any time by the Company at the original purchase price.
      The Preferred Shareholders will have thirty days thereafter to convert to
      common stock.
   -
17 -
  FALCON
RIDGE DEVELOPMENT, INC. and SUBSIDIARIES
 Notes
to Consolidated Financial Statements
 
  On April
15, 2006, the Company established Series B Convertible Preferred Shares and
authorized 400,000 shares. The preferences are as follows:
  ·
              Shares
      are non-cumulative with a preference over common shares if and when a
      dividend is declared.
  ·
              Investor
      will receive a dividend of 12% per annum payable monthly for a period of
      eighteen months from the date of
purchase.
  ·
              Shares
      are convertible into common stock at any time on the basis of 75% of the
      average current bid price for the preceding 20 days of the Company's
      receipt of notice to convert. This conversion rate is subject to
      adjustments for forward or reverse splits or other capitalizations. The
      option was of no intrinsic benefit, at the commitment date, to the
      preferred shareholder.
  ·
              Shares
      have a priority over common shares upon
  liquidation.
  ·
              Shares
      are callable by the Company at any time after 12 months of issuance of
      Preferred B shares at the original purchase price. The Preferred
      Shareholders will have sixty days thereafter to convert to common stock.
      The shares will be repurchased after eighteen months for the original
      issue price.
  
  Preferred
Shares subject to mandatory redemption
  The
features of our Series B Preferred Stock and determined that it falls within
SFAS 150 “Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity”. Due to redemption features of the securities, the
preferred shares are being classified as a liability in these financial
statements. The securities give the holder the option of a net cash settlement
or a settlement in common share based on a conversion rate.  The value
of the liability is fixed at the stated value of $485,000.  However,
the number of common shares into which the preferred shares are convertible is
inversely related to changes in the Company’s common stock.  Although
the potential conversion could conceivably require the Company to issue a number
of shares in excess of its authorized limit, the Company does not believe that
its liability recorded at December 31 2007, associated with the Series B
preferred stock is appropriate in that such obligation would not exceed the
aggregate stated value.
  Classification of Real
Estate Held for Development and Sale
  At March
31, 2009, the classification of Real Estate Held for Development and Sale in the
amount of $1,201,995 was removed from current assets and classified as a
long-term asset.  Although the property is being held with the intend
to develop or sell, due to the current difficulty in raising capital it is
doubtful that the Company will be able to complete the development of Spanish
Trails within its normal operating cycle of two-three years.
  -
18 -
  Item
2.  Management’s Discussion and analysis of Financial Condition and
Results of Operations
  OVERVIEW
   In mid to
late 2008, conditions within the homebuilding industry became very challenging.
Estimates are that home sales were down 15-20% at the end of period ending
9-30-08.  The downward trend has accelerated.  Despite
current conditions, management believes that housing market conditions will
improve.  This belief is based on many factors, not the least of which
is the Government’s stimulus plan and their continued involvement. We estimate
the improvement will occur over the long-term. In the short term, we expect that
conditions will continue to be demanding, but the decline appears to be near the
bottom. Several factors contributed to the difficult environment, including:
lack of financing, continued high inventory levels for both new and existing
homes, in addition to a glut of developed building lots, The result will be seen
in continued downward pressure resulting in large price reductions and higher
sales incentives. Adding to this stress is the credit tightening of the mortgage
markets, along with increasing home foreclosures in many markets. These factors
taken with other unforeseeable occurrences will result in lower gross profits
for the industry in general
   STRATEGY
  We
believe the long-term fundamentals, namely population growth and household
formation, remain solid and will continue to support housing demand. This is
especially true when put in the context of specific, targeted markets that the
Company is in a position to enter. We also believe current market conditions are
extremely challenging and demanding and will remain so for the near term.
However, it will moderate over the long term. In the interim, we are exploring
other areas related of real estate that could generate revenue for the Company.
For instance, we are currently exploring potential merger(s) and/or
acquisition(s) of related businesses and corporations.  Renegotiating
or cancelling land option purchase contracts from current levels is also under
serious consideration.  The ability to obtain financing, both for
development and home building projects, and for home mortgages, remains
extremely difficult to obtain. Any or all of these factors can predictably lower
sales volume and gross profits significantly.   Management is
also exploring how to best use its real estate and finance
experience.  One area of focus is loan workouts. In this scenario the
Company may create a division to help real estate owners in financial distress
avoid foreclosure through the use of structured refinance and loan
modifications.  Another, viable alternative is the purchase of
financial instruments collateralized by real estate.  Falcon Ridge is
in negotiations to purchase such instruments at a discount to their fair market
value.  If successful the purchase of these instruments will be
subject to financing which may be easier to obtain then financing for
real-estate development at this time.  We believe if successful this
can provide the Company a method to enhance shareholder value during this real
estate downturn.  This would constitute a change in corporate strategy
at least for the short term.
  The
following discussion of our financial condition and results of operations should
be read in conjunction with, and is qualified in its entirety by, the
consolidated financial statements and notes thereto included in Item 1 in this
Quarterly Report on Form 10-QS. This item contains forward-looking statements
that involve risks and uncertainties. Actual results may differ materially from
those indicated in such forward-looking statements.
 
  -
19 -
  Forward-Looking
Statements
 
 This
Quarterly Report on Form 10-Q and the documents incorporated herein by reference
contain forward-looking statements that have been made pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates, and
projections about our industry, management beliefs, and certain assumptions made
by our management. Words such as "anticipates," expects," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words, and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties, and assumptions that are difficult to predict; therefore,
actual results may differ materially from those expressed or forecasted in any
such forward-looking statements. Unless required by law, we undertake no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise. However, readers should
carefully review the risk factors set forth in other reports and documents that
we file from time to time with the Securities and Exchange Commission,
particularly our Annual Reports on Form 10-KSB and any Current Reports on Form
8-K.
  Overview and
History
 
 We are a
Nevada corporation with two subsidiaries, Sierra Norte, LLC ("Sierra Norte") and
Spanish Trails, LLC ("Spanish Trails"). We are in the real estate industry and
acquire tracts of raw land and develop them into residential lots for sale to
homebuilders. We plan to expand our operations in 2007 into homebuilding on our
Spanish Trails lots. Our executive offices are located in the Albuquerque, New
Mexico area.
 
 On May
20, 2005, we completed a reverse acquisition transaction. We acquired Sierra
Norte, a New Mexico limited liability company, which thereby became our
wholly-owned subsidiary. Sierra Norte is a land development company in the
Albuquerque, New Mexico area. Formerly we were a technology company which was in
the business of developing and marketing color comparison devices. We acquired
Spanish Trails on July 6, 2005 as discussed below.
 
 As a
result of the Sierra Norte acquisition, the former security holders of Sierra
Norte acquired a majority of our outstanding shares of common stock. For
accounting purposes, Sierra Norte has been deemed to be the acquirer in the
acquisition and, consequently, the assets, liabilities and historical operations
that are reflected in our financial statements are those of Sierra Norte, which
are recorded at the historical cost basis of Sierra Norte. The reverse
acquisition was consummated under Color pursuant to an Agreement and Plan of
Reorganization dated May 20, 2005.
 
 On
July 6, 2005, we entered into an exchange of securities whereby we acquired 100%
of the ownership of Spanish Trails, in exchange for the issuance of a total of
614,882,069 (pre-reverse split) of our common shares. As a result of the Spanish
Trails acquisition, the former security holders of Spanish Trails acquired a
majority of our outstanding shares of common stock, but we did not have a change
of control because the owners of a majority of Spanish Trails were the executive
officers and majority shareholders of the Company. After the exchange,
752,262,441 (pre-reverse split) shares of common stock were issued and
outstanding.
 
 Also, on
July 6, 2005 we reincorporated our company to Nevada from Colorado and changed
our name to Falcon Ridge Development Inc., after shareholder approval. In
connection with the name change, we changed to a new trading symbol,
FLRD.BB.
 
  -
20 -
  On August
16, 2006 we affected a 1 for 200 reverse split of our common stock. This reduced
the outstanding shares from 752,262,441 to 3,761,312 and we changed our trading
symbol to FCNR.BB.
 
 Our
Spanish Trails project is progressing through local real estate governmental
clearance toward final approval of our platting plan. We anticipate the process
should be completed by mid-2008. When our platting plan receives final approval,
we will be able to begin construction of the first phase of development of
approximately 517 lots for single family homes. Considerable up front costs in
any real estate platting project must first be incurred and paid for, thus in
the early stages of our real estate projects significant amounts of capital can
be required until platting occurs, and lots are improved and sold. Predictably,
greater revenues will be achieved as soon as a portion of the lots are improved
and sold. When the lot development has been completed and accepted by the
Valencia County, New Mexico, engineers and construction of the lots completed,
the sale of those lots will be funded and closed. It is also our intention to
initiate a home building division on some of the remaining developed Spanish
Trails project lots not sold to homebuilders. We expect to have initial models
open in the Spring of 2008. The sale of homes and, consequently, the pace of
construction, will be determined by the rate of market absorption.
 
 Results of
Operations
 
 Three  and Six
Month Periods Ending March 31, 2009 Compared to Three and Six Month Periods
Ending March 31, 2008
 
 We had no
revenue for the three and six month periods ended March 31, 2009.  For
the corresponding periods ended March 31, 2008 we had revenues of $35,143 and
$82,453 respectively.  This revenue was provided by our real estate
services companies, which consisted of application, qualification and loan
processing fees attributable to our mortgage division. The Mortgage division was
incorporated in the State of New Mexico and its Certificate of Organization
was issued on or about August 3, 2007, under the name Falcon Ridge Investments,
LLC. It has been operating since as a wholly owned subsidiary of Falcon Ridge
Development, Inc. We are in the process of exploring how to expand personnel,
locations and licensing in other States.
 
 To
conserve cash the Company has used cash and stock issuances to compensate
consultants and employees.  For the quarter needed March 31, 2009, the
company did not make additional expenditure to consultants.  For three
and six month periods ended March 31, 2008, the company compensated consultants
and employees $2,917,700 and $3,303,146 respectively.  The reduction
reflects the down turn in the real estate market.
 
 Our
selling, general and administrative expenses for the three and six month periods
ending March 31, 2009 were $18,380 and 29,428 respectively.  This
compares to $90,267 and 29,428 for the corresponding periods ended March 31,
2008.  The major components of these expenses are rent, utilities,
office, and accounting and legal fees.. The reduction in selling general and
administrative expenses is due to general down turn in the real estate industry
and the Company has cut back on expenses.  An affiliate from whom the
Company rents its office space has suspended the lease for an indefinite period
of time.   In February of 2009, the Company moved its offices to
the home of its president to further reduce overhead expenses.
 
  -
21 -
  Our
principal potential source of revenue in the near term is expected to be from
139 acres of land we own in the Spanish Trails project, which is being developed
as discussed above. In this development, we plan to build homes as well as
develop and construct the community. The timeframe over which developed lots and
or homes will be sold may be several years.  As noted in notes
payable, the Company on August 1, 2008 became in default on its mortgage of
$1,150,000 to Metro Loan Corp .  The mortgage company has not
initiated foreclosure proceedings to date.  The management of Falcon
Ridge is considering its options which include tendering the deed in lieu of
foreclosure. Should either of these two events occur, the Company could lose it
major revenue producing asset.
 
 The
Spanish Trails development could be sold to another developer or to a builder
and the Company is attempting to find buyer or buyers.  However, in
the current depressed real estate market, the management to date had not located
a buyer.  Unless management is able to raise sufficient funds to
further develop this site, it future as a revenue producing asset is at
risk.
 
 Due to
the continued economic depressed real estate market, particularly during the
quarter ended December 31, 2008, the Company recorded an impairment adjustment
to its carrying value of Spanish Trails of $1,989,576 reducing its carrying
value to $1,200,000.
 
 Liquidity and Capital
Resources
 
 At March
31, 2009, had a negative balance in its cash account of $1,051 which is included
in accounts payable in the balance sheet.
 
 Our net
cash used in operating activities for the six months ending March 31, 2009 was
$9,788  compared to $90,110 for the six months ending March 31,
2008.  The reduction in net cash used by operating activities was due
primarily to a cut back in operations of the Company by its
management.
 
 Our net
cash from investing activities was $2,973 for the six month period ending March
31, 2009, compared to $2,833 cash used by investing activities for the six month
period ending March 31, 2008.
  Our
net cash provided by financing activities was $5,876 for the quarter ended March
31, 2009, compared to $22m692 for the six month period ending March 31,
2008.
 
 The
timing of the completion of the platting of our Spanish Trails project is not
certain, so we cannot assure the timing of cash flow from lot sales. We are
faced with a severe working capital shortage. In our efforts to seek financing,
it may not be available or, if available, it could be on terms which are cost
prohibitive to us.  As noted above the Spanish Trails development is
in foreclosure with Metro Loan Corp.  The mortgage amount is
$1,150,000.  Unless the Company can negotiate a loan extension on
favorable terms, the future revenue from this development is at high risk. To
date the mortgage holders has not initiated foreclosure
proceedings.
 
 Management
is currently searching for a business model which it could bring into the
Company which would provide the opportunity to increase significantly its asset
base and correspondingly its revenue producing ability.  While
management is working diligently towards this goal, there is no assurance that
it will succeed.   Please see “STRATEGY” section above for a more
complete explanation of the business opportunities the Company is
pursuing.
  -
22 -
  Recently Issued Accounting
Pronouncements
 
 We do not expect the adoption of any recently issued accounting pronouncements
to have a significant impact on our net results of operations, financial
position, or cash flows.
 
 Critical Accounting
Policies
 
 The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires us to make a number of estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements. Such estimates and
assumptions affect the reported amounts of revenues and expenses during the
reporting period. On an ongoing basis, we evaluate estimates and assumptions
based upon historical experience and various other factors and circumstances. We
believe our estimates and assumptions are reasonable in the circumstances;
however, actual results may differ from these estimates under different future
conditions.
  We believe that the estimates and assumptions that are most important to the
portrayal of our financial condition and results of operations, in that they
require our most difficult, subjective or complex judgments, form the basis for
the accounting policies deemed to be most critical to us. These critical
accounting policies relate to bad debts, impairment of intangible assets and
long lived assets, contractual adjustments to revenue, and contingencies and
litigation. We believe estimates and assumptions related to these critical
accounting policies are appropriate under the circumstances; however, should
future events or occurrences result in unanticipated consequences, there could
impact on our future financial conditions or results of operations.
 
 
 Item
3.  Qualitative and Qualitative Disclosures about Market
Risk
 
 There are none to report.
 
 
 Item
4.  Controls and Procedures
 
 Evaluation
of Disclosure Controls and Procedures
 
 Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by us in
the reports that we file under the Exchange Act is accumulated and communicated
to our management, including our principal executive and financial officers, as
appropriate to allow timely decisions regarding required
disclosure.
 The
Company’s management, under the supervision and with the participation of the
Company's Chief Executive Officer and Chief Financial (and principal accounting)
Officer, carried out an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30,
2008.  Based upon that evaluation and the identification of the
material weakness in the Company’s internal control over financial reporting as
described below under “Management’s Report on Internal Control over Financial
Reporting,” the Chief Executive Officer and Chief Financial Officer concluded
that the Company’s disclosure controls and procedures were ineffective as of the
end of the period covered by this report.
  -
23 -
  Management's
Report on Internal Control over Financial Reporting
  A
company’s internal control over financial reporting is a process designed by, or
under the supervision of, a public company’s principal executive and principal
financial officers, or persons performing similar functions, and effected by the
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles (“GAAP”) including those policies and procedures
that: (i) pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the assets of
the company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures are being made only in accordance with
authorizations of management and directors of the company, and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company’s assets that could have a
material effect on the financial statements.
  Management
is responsible for establishing and maintaining adequate internal control over
financial reporting. Our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, has assessed the effectiveness of
our internal control over financial reporting as of September 30, 2008. In
making this assessment, our management used the criteria established inInternal
Control—Integrated
Framework  issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO).
  During
this evaluation, the Company identified a material weakness in its internal
control over financial reporting.  A material weakness is a
deficiency, or combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis.  The identified material weakness
consists of, as of the end of the period covered by this report, limited
resources and limited number of employees, namely the lack of an audit
committee, an understaffed financial and accounting function, and the need for
additional personnel to prepare and analyze financial information in a timely
manner and to allow review and on-going monitoring and enhancement of our
controls.
  Based on
our assessment and the criteria discussed above, the Company has concluded that,
as of September 30, 2008, the Company’s internal control over financial
reporting was not effective as a result of the aforementioned material
weakness.
  Notwithstanding
the material weakness in the Company’s internal control over financial reporting
and the Company’s consequently ineffective disclosure controls and procedures
discussed above, management believes that the financial statements included in
this Quarterly Report on Form 10-Q present fairly, in all material respects, our
financial position, results of operations, and cash flows for the periods
presented in accordance with the U. S. generally accepted accounting
principles.
  This
quarterly report does not include an attestation report of the Company’s
independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by the
Company’s independent registered public accounting firm pursuant to temporary
rules of the SEC that permit the Company to provide only management’s report in
this annual report.
  Plan
for Remediation of Material Weaknesses
  In
response to the identified material weakness, the Board of Directors planned to
form an audit committee by the end the second fiscal quarter, March 31,
2009.   However, due to limited resources, the Company was unable
to establish and audit committee as of that date.  Subject to
additional funding the Company will for an audit committee as soon a reasonable
practicable.  With oversight from this committee, we plan to improve
our control environment and to remedy the identified material weakness by
expanding the resources available to the financial reporting
process.  These ongoing efforts are to include: (i) evaluating and
improving our existing internal control documentation to develop clear
identification of key financial and reporting controls; (ii) a restructuring of
our existing personnel in order to achieve a full-time equivalent position in
our accounting department to improve segregation of duties.
   -
24 -
  Limitations
on Effectiveness of Controls and Procedures
  Our
management, including our Chief Executive Officer and Chief Financial Officer,
do not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include, but are not limited to, the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.
  Changes
in Internal Control over Financial Reporting
  There
were no changes in our internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of Rule 13a-15 or
15d-15 under the Exchange Act that occurred during the quarter ended March 31,
2009 that have materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
   PART
II – OTHER INFORMATION
  
 
 Item
1.  Legal Proceedings
 
 There are
no current legal proceedings in which the Company is involved.
  
 Item
1a.  Risk Factors
 
 There
have been no material changes in risk factors subsequent to September 30,
2008.  Please see the 10-K for a discussion of these
factors.
  
 Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds
 
 There
were no shares of unregistered equity securities issued during the quarter ended
March 31, 2009.
  
 Item
3.  Defaults Upon Senior Securities
 
 On August
1, 2008, the Company was in default on a loan in the amount of $1,150,000 to
Metro Loan Corp.  The loan is secured by a first mortgage on its
Spanish Trails development.   The lender has not initiated
foreclosure proceedings at the date of this filing.   Please see
Management’s Discussion and Analysis of the Results of Operations for further
information.
 
 Item
4.  Submission of Matters to a Vote of Security Holders
 
 During
the quarter ended March 31, 2009, no matters were submitted to a vote of
security holders.
  
 Item
5.  Other Information
 
 None
  -
25 -
  
 Item
6.  Exhibits
   Exhibit
                  Number
                Description2.1
                Agreement
      and Plan of Reorganization - Pocketspec Technologies, Inc. and Sierra
      Norte LLC2.2
                Acquisition
      Agreement - Pocketspec Technologies, Inc. and Spanish Trails, LLC3.1
                Articles
      of Incorporation of Falcon Ridge Development, Inc. previously
      filed.3.2
                Bylaws
      of Falcon Ridge Development, Inc. previously filed.3.3
                Articles
      of Organization of Sierra Norte, LLC previously filed.3.4
                Operating
      Agreement of Sierra Norte, LLC previously filed.3.5
                Articles
      of Organization of Spanish Trails, LLC previously
filed.3.6
                Operating
      Agreement of Spanish Trails, LLC previously filed.4.1
                Articles
      of Amendment - Establishment of Series of Preferred Stock previously
      filed.14.1
                Code of
      Ethics21.1
                List
      of Subsidiaries23.1
                Consents
      of experts31.1
                Certification
      of Chief Executive Officer pursuant to Rule
      13a-14(a)/15(d)-14(a)*31.2
                Certification
      of Chief Financial Officer pursuant to Rule
      13a-14(a)/15(d)-14(a)*32.1
                Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002*32.2
                Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002*99
                Additional
      Exhibits - None
 
 * Filed
herewith
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26 -
  Signatures
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
   FALCON RIDGE DEVELOPMENT, INC.By:
                /s/ Fred M. MontanoFred M. Montano
                  Chief
      Executive Officer
  By:
                    /s/ Karen Y. DuranKaren
      Y. Duran
                      Chief
      Financial OfficerDate:
      July 6, 2009
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
 
 Signature
                
                Title
                Date/s/ Fred M. Montano
                
                Chairman
      of the Board
                July
      6, 2009Fred
      M. MontanoDirectors
      and Chief Executive Officer/s/ Karen Y.Duran
                
                Chief
      Financial Officer
                July
      6, 2009Karen
      Y. Duran/s/ SebastianRamirez
                
                Director
                July
      6, 2009Sebastian
      Ramirez/s/ Troy Duran
                
                Director
                July
      6, 2009Troy
      Duran
 
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27 -